In response to ongoing changes in the banking industry, Moody’s continues to enhance its bank rating methodology in order to maintain the relevance and accuracy of Moody’s credit analysis and ratings. With many countries adopting resolution regimes to handle bank failures, bank counterparty risk has evolved. To provide additional clarity and meet this distinct market need, Moody’s has introduced the Counterparty Risk Rating.
As part of Moody’s bank rating methodology, governance is assessed under a Corporate Behavior framework. Moody’s currently applies Corporate Behavior adjustments to 75 banks globally, most of which are negative.
Find out how Moody’s Counterparty Risk Rating completes Moody’s bank rating architecture.
Moody’s approach starts by analyzing a banks intrinsic or standalone strength, without external support, and assigning a Baseline Credit Assessment.
In the Support & Structural Analysis component, consideration is given to the potential for external or Affiliate Support, the expected loss in the event of a default or bank failure, the Loss Given Failure, and the likelihood of Government Support.
Click on the components below to learn more.
An introduction to Moody's Bank Rating Methodology.
Our Baseline Credit Assessment (BCA) has three main components: a macro profile, financial factors and qualitative factors.
Our Support & Structural Analysis assesses the probability of external support from an affiliate or government entity.